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Gold traded down at the end of last week faced with a somewhat firmer dollar and a US August Non-Farm Payroll print that combined both weaker than expected hiring and firmer wages. Rates markets have concluded that this might not only give the Fed pause for thought but that this would also be a policy error. While expectations of total Fed easing until the end of the year have fallen from c. 125bp to c. 115bp, they have also increased from c 240bps to c. 280bps by June 2025. This is ultimately bullish for gold but weakens short-term fundamental support. Gold starts this week trading at $2491/toz.
KAU/USD 1-hourly Kinesis Money
The CFTC Commitments of Traders (CoT) report published late on Friday saw gold speculators only slightly trim their net long gold futures positions over the week from the 52-month high seen at the end of August. However, data from physical gold ETFs/ETCs suggests that the first week of September saw net outflows, with European funds leading withdrawals. Friday also saw the People’s Bank of China (PBoC) reporting unchanged reserves at the end of August, implying a fourth straight month of zero net purchases. Overall, the gold flow and positioning picture seems rather less bullish – perhaps inevitable given elevated prices.
Technically, gold’s inability last week to successfully challenge descending minor oblique and major horizontal resistance confirms the overall picture of consolidation seen since 19 August and foreshadowed by unfavorable MACD and RSI indicators. Today these resistance levels appear at $2520/toz (descending minor oblique) and $2525/toz (major horizontal).
To the downside, the rising 20-day Simple Moving Average appears to have provided support, and this currently lies at $2498/toz. However, this seems very vulnerable given its proximity and poor underlying momentum. More dependable support is seen at $2490/toz being the confluence of major ascending oblique support and the 23.61% Fibonacci Retracement of the 25 July – 20 August uptrend.
It’s a relatively slow start to the events calendar this week, although August China inflation today and European Commission Summer Economic Forecasts on 10 September should be of interest to gold investors.
